Starting May 1, CVS/Caremark will take over as the pharmacy benefit manager for state government employees and retired employees not enrolled in Medicare, the administrator of the Hawaii Employer-Union Health Benefits Trust Fund said Thursday during an informational briefing to legislators.
The move from InformedRx to CVS/Caremark, parent company of Longs Drugs, will benefit Hawaii workers because the customer service center will move from the mainland to Oahu, and those who staff it will be more informed of name pronunciations and Hawaiian culture in general, Barbara Coriell said in her testimony to the state committees on Labor and Finance.
Other benefits Coriell mentioned include a first-year decrease in costs of 13.3 percent over 2011, a larger overall drug plan network in addition to Longs pharmacies, and the option of picking up mail-order prescriptions at Longs locations.
"I applaud the work they’ve done … but with some of the uncertainties with the effective date (and) active rollout of the plan … I’m cautiously optimistic," Finance Chairman Marcus Oshiro said after the briefing. "I’m a little concerned because 17,000 of the Medicare subscribers will not know whether or not it kicks in on May 1 or (will) be postponed to sometime in the future."
When the new plan kicks in on May 1, the 17,713 state retirees enrolled in Medicare benefits will remain covered by InformedRx.
Coriell said the EUTF has elected to cover the added cost of keeping InformedRx for those subscribers because CVS prices were publicized to them before it was known they would have to remain on the more costly plan.
The added cost per month is $2.5 million and will last for an estimated four months for a total of $10 million, Coriell said.
The cost will be covered by unrestricted reserve funds in EUTF’s account — as approved by the board — which currently total more than $80 million.
The new contract with CVS was approved in mid-December after InformedRx initiated a lengthy protest process in August. But a hearing officer approved the award for 19,409 active and 5,153 retired employees not receiving Medicare and dismissed the award for the 17,713 beneficiaries also on the Medicare drug plan, Coriell said.
An evaluation committee reviewed the issues highlighted by the hearing officer, and re-scored the proposal, and the contract for retirees on Medicare was recently re-awarded to CVS. Since it is a new award, however, there is the potential for InformedRx to file another protest, which would further prolong the start date, Coriell said.
The size of the EUTF’s reserve fund also piqued the interest of lawmakers during the hearing as being a possible source to tap into to cover currently unfunded future retiree health benefits that will total at least $9.8 billion over the next 30 years, according to a July 2009 evaluation.
"Now that we’re totally insured by a provider — in this case, HMSA (Hawaii Medical Service Association) — they get all the liability, so you don’t need to have that kind of huge reserve as a contingency," Oshiro said.
The EUTF will propose two bills during this legislative session: one that would create a separate irrevocable fund for money contributed toward covering future retiree benefits because active and retired employee money is currently commingled in one account; and another that would move rate changes back to a July 1 plan year to coincide with Medicare B plan changes so people experience only one increase per year.
